Family members planning to administer the estate of a relative who has died intestate will have to apply to receive superannuation benefits and may be forced to pass them to the estate if they do not follow this process, an SMSF lawyer has noted.
DBA Lawyers special counsel Bryce Figot said a number of legal cases in the past decade have created a “blanket positive duty” that a fiduciary duty is owed by the administrator of an intestate estate where they must apply for payment of any superannuation funds not subject to a binding death benefit nomination (BDBN) to the intestate estate.
Speaking during a webinar late last week, Figot noted this position had developed following the cases of McIntosh v McIntosh [2014] QSC 99, Brine v Carter [2015] SASC 205, Burgess v Burgess [2018] WASC 279 and Gonciarz v Bienias [2019] WASC 104 and even though each case involved an Australian Prudential Regulation Authority (APRA)-regulated fund, the duty would likely also apply to SMSFs.
“In the world of superannuation, death benefits and intestacy, if someone dies and they leave a widow or widower, even if they are de facto, it is usually that person who is going to put up their hand and become the administrator of the intestate estate,” Figot said.
“What happens then if that person wants to receive some of the superannuation money personally?
“A lot of these cases make clear if someone dies intestate and they haven’t made a BDBN, whoever is the administrator cannot receive superannuation personally. If they receive it personally, they might have to disgorge it to the estate.”
He added that if this occurs, it may lead to disputes with other parties who have a claim to the estate as well or passed on to beneficiaries of it.
As such, he said financial advisers should encourage clients to have both a will and BDBN to ensure super benefits go to the intended recipients.
“Justice Martin in Burgess v Burgess said the circumstances of that case could have been avoided if the deceased man had ‘executed a will, then the undesirable scenario for his surviving family of dealing with the intestacy situation would have been avoided’,” he said.
“He also goes on to say he could have also made a BDBN and I would say do both because we’re talking about APRA funds where a BDBN only lasts for three years, but at least a will can often last indefinitely.”
